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1031 exchange for installment sale?

Posted on: 29th Mar, 2009 06:16 pm
I am thinking about selling a rental to my children. If I were to sell them, say, a 50% interest in the property, then use the funds for a 1031 exchange, can I later sell them the remaining interest and again use a 1031 exchange for the same property? Is there a better way to structure the sale in order to maximize my return and minimize capital gains issues?
Hi millst!

Welcome to Forums!

A 1031 exchange is also known as a tax deferred exchange. It is a method of selling one property and acquire another property within a specific time period. However, both the property should be of "like-kind". The whole process of buying and selling is identical to any sale and buying situation. You will not have to pay any capital gains tax in such an exchange As far as I know, it is unlikely that the seller of the property under an installment sale contract would be able to successfully defend the tax deferred exchange treatment for their transaction if challenged by the IRS.

Sussane
Posted on: 29th Mar, 2009 08:43 pm
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